Over the last two decades, shoplifting has continued to be the scourge of retailers big and small. Unfortunately for the retail community, the latest figures released in the 30th Annual Retail Theft Survey conducted by Jack L. Hayes International, a consulting firm for the loss prevention and shrink control market, show no signs of improvement.
In fact, based on their survey results, for every $1 recovered, $11.54 is lost to retail theft; meaning only 8.7 percent of total retail theft losses result in a recovery. That is a huge chunk of dollars scurrying out the door in an already margin-stressed industry. With more than $428 billion in annual retail sales for 2017 coming from the 21 large retail companies participating in the survey, their average shrinkage is 1.44 percent of sales (at retail).
Survey participants apprehended a total of 432,046 dishonest individuals (shoplifters and employees) in 2017, an increase of 1.7 percent from the prior year. In addition, dollars recovered from those apprehended thieves totaled over $188 million, which was an 8.1 percent increase from 2016.
“They [the numbers] reflect that the problem of retail theft is just getting worse, year after year, with no end in sight. The number of shoplifters and dishonest employees apprehended and the dollars recovered from those apprehended thieves has risen in eight of the past 10 years,” says Mark Doyle, President of Jack L. Hayes International. ”The biggest risk factor now in dealing with shoplifters is the safety of store employees and customers. For several years now we have seen shoplifters getting more vocal and more physical during their theft occurrences. From loud verbal abuse to physical assault on associates, these type situations are happening more frequently.”
When the survey asked the participants why their shoplifting apprehensions and recovery dollars increased or decreased in 2017; they contributed the following:
Increased:
• Less risk of selling stolen merchandise online
• Change in product lines - carrying more theft desirable items
• Increased focus on shoplifters and on high theft categories/departments
• Felony thresholds being raised/increased in various states
• Nationwide drug crisis increasing
Decreased:
• Implemented a more thorough return process/policy
• Increased focus on prevention, instead of apprehension
• Better merchandise display standards
• Better EAS tagging compliance
Doyle explains that there are several factors his retail participants cite as major contributors to the continued rise in shoplifting.
Reduced Customer Service Due to Fewer Sales Associates on Floor
Fewer sales associates on the sales floor provide shoplifters with the privacy they want/need to commit their acts of theft. Unfortunately, more retailers are becoming self-service, instead of customer service focused.
Shoplifting Felony Thresholds Increasing
There are currently 29 states with a felony threshold for Shoplifting/Larceny of $1,000 or higher. Shoplifting cases less than these high dollar thresholds result in a misdemeanor offense only, meaning less police assistance and little if any punishment. Thieves view shoplifting as a high reward, low-risk endeavor.
Stolen Merchandise is Easy to Sell to Larger Audiences
Many thieves have found that selling their stolen items through various online auction sites or returning their stolen goods for a merchandise credit or gift card (which they sell to a second party) results in quicker sales and much higher prices than the traditional selling of items on the street or at a local flea market.
Organized Retail Crime (ORC) Continues to Increase
Losses from ORC are reported to be over $30 billion annually, with almost 100% of retailers acknowledging they have been a victim of ORC activity in the past 12 months. These thieves work diligently to commit their theft of popular items such as over-the-counter medicines; razors; batteries; tools; cell phones; and designer clothing. It is common for them to work in "teams", employ distraction techniques, and use ‘booster-bags’ to circumvent anti-shoplifting systems.
Nationwide Drug Crisis Increasing
The increasing drug crisis in the United States, led by the misuse and addiction to opioids, is creating a need for cash among these drug users and many are turning towards shoplifting as a way to sustain their habit.
Doyle insists there are some best practices that all retailers can employ to help stem the tide of internal and external shoplifting, ranging from simple, attentive customer service to advanced technology.
- Provide good customer service: Shoplifters want and need privacy; so take it away from them. When they respond “I'm just looking,” teach employees to say “Ok great, I’ll keep my eye on you in case you need any assistance.” Honest customers are ok with this (you are there if they need help), and this is the last thing a shoplifter wants to hear.
- Have employees walk the sales floor: Keep visible, and keep displays neat and organized (so missing items can be more easily noticed).
- Have good sight lines on the sales floor: Do not block the view of high value and highly popular items, and keep these items in sight of employee work areas.
- Hire honest and motivated employees: Train them to prevent shoplifting (what to look for, how to respond to a possible shoplifter, etc.).
- Use technology: Remember, technology (EAS: electronic article surveillance, CCTV, merchandise alarms, ink/dye tags, product tie-downs, Keeper boxes, etc.) must be managed. Also, ensure policies/procedures regarding technology are adhered to: EAS tagging 98% or higher, items required to be alarmed or tied-down are done so, etc.
- Know your merchandise: Especially highly popular items, high-value items, what’s stolen most often and what’s easily stolen. Study why these items are taken, evaluate their locations and packaging – then make changes as needed.
- Limit item quantity on sales floor: Limit the number of certain items (high value, highly pilferable) placed on the sales floor. This will reduce vulnerability to large losses of these items and make it easier to identify missing items.
- Prosecute shoplifters: Thieves know which retailers prosecute and those that do not. Prosecution can be a good deterrent.
The survey also reveals some staggering theft statistics related to shoplifting and its economic impact on retailers. Total retail losses are approximately more than $44 billion annually, according to a University of Florida study, which says shoplifting accounts for an estimated 30 to 40 percent of total retail shrink/losses. Retailers lose an average of $36 to $48 million daily due to shoplifting or close to $2 million per hour,
While the threat of insider theft has also grown in recent years, it actually showed a four percent drop in 2017 from the year prior. Still, the survey participants responded that one out of every 35 employees was apprehended for theft from their retail employees in 2017
“Yes, the apprehension of dishonest employees and the dollars recovered from those thieves have increased in eight of the past 10 years. The reduction of internal theft begins at the point-of-hire, so do not hire the ‘bad apple.’ However, when statistics show one out of every 35 employees is actually caught stealing by their employer, there has to be some type of breakdown in the pre-employment screening process,” admits Doyle. “In an effort to reduce their costs and to staff a store/location more quickly, we hear of retailers reducing their pre-employment screening requirements, thus hiring less desirable associates.”
Doyle points out that there have been more government restrictions placed on various types of pre-employment screening (criminal background checks, drug testing, previous employer references, etc.), which he feels has undoubtedly resulted in the hiring of less than desirable associates.
With that said, he adds that once hired, the following can be used to monitor and reduce the possibility of internal theft.
- Use Technology: Use a POS exception-based monitoring program to quickly identify possible fraudulent transactions at the point of sale (ie. excessive refunds (cash or credit); refunds or voids before or after store hours; dummy or generic SKU usage, etc. Use CCTV to keep an eye on associates.
- Auditing for Compliance: Ensure consistent compliance with company policies and procedures by conducting unannounced loss prevention/shrink audits on a regular basis. By reducing the opportunity, you reduce the chance of theft/loss.
- Training & Awareness: Invest in loss prevention training and awareness programs for all employees, and set-up a reward program for employees who report dishonest activities.
- Back to Basics: Always ensure LP “basics” are in place and adhered to at all times:
- Door controls (OH doors locked and Exit doors alarmed)
- Trash controls (Process supervised, clear bags, cartons flattened)
- Package/bag checks (conduct whenever an employee exits the location)
- POS controls (2 people witness and verify refunds, voids, price overrides)
- Sales Verifications: (“Pass-outs” are an easy way to steal with friends/relatives, so have management conduct daily sales verifications)
- Opening and closing (always with 2 employees – security and safety issue)
Despite all the bad news, Doyle and his team did take some solace in the fact that both apprehension rates and dollar recovery were up over last year. But he insists that retail theft overall continues to be a serious problem for retailers negatively impacting their bottom-line, which results in higher prices to consumers.
"The recovery dollars from shoplifting continuing to increase at such a high rate, both from those apprehended and those not apprehended (ditched or dropped merchandise prior to leaving the store). Dollar recoveries from apprehended shoplifters have increased in eight of the past 10 years, with that increase being 12.9 percent in 2017. The dollars recovered where no apprehension was made, increased for the 21st consecutive year, up an amazing 18.1 percent in 2017,” says Doyle. “The dollars are staggering, and reflect the tremendous increase in retail theft.”
About the Author:
Steve Lasky is the Editorial Director for SouthComm Security Media, which includes security publications Security Dealer & Integrator, Security Technology Executive and Locksmith Ledger, in addition to top security web portal SecurityInfoWatch.com (SIW). He is a 30-year veteran of the security industry. He can be reached at [email protected].
